As Mr. Uchiyamada said in his welcoming remarks last night, this is the
first time Toyota has gathered its current, full global fleet of hybrid
vehicles. So it is also the first time that I have seen them
assembled together as well. You can imagine how I feel… at such a
family reunion. Very special.

As I am sure everyone understands, this event is focused on our entire
lineup of hybrids. It is my job to give you a taste of what we have in
store in our hybrid future. However, it’s impossible not to
begin with how it all began.

I was one of the lucky engineers to be assigned to the G21 program in
October 1993. I had been working for Toyota for 10 years, and I was
assigned to theproduct-planning department.

G21 stood for “Global 21st Century." Ironically, its goal was
not to develop a hybrid vehicle. Instead, its goal was to
develop an affordable five-passenger family car, that would address the
fuel efficiency and environmental needs of the 21st century.

Our focus was not on the next generation. It was to be
much further into the future.

Initially, the idea was to develop a car that delivered a 50% improvement
in fuel economy… of a typical Toyota compact sedan powered by a
1.5-liter engine before the beginning of the 21st century.

At the time, a separate powertrain group was showing considerable progress
on a gas-electric hybrid system that eventually became the key to achieving
our cost and performance targets.

As the benefits of going hybrid became clearer, there was an important
change in strategy. Instead of doing what we could, we
would try to do what we should. A new goal was set.

Again, based on a typical compact sedan and 1.5-liter engine, we would
double fuel efficiency, cut emissions in half and reduce development time
by two years. To achieve these goals, many diverse elements would come
into play, including things like aerodynamics, rolling resistance and
lightweight.

Does anyone know what these numbers represent?

At the time, we identified 80 different hybrid configurations that could be
considered. We narrowed it down to the top-20, then ran them through
simulations seeking “overwhelming
fuel-efficiency….” and found four prime candidates.

At this point we could assess degree of difficulty and cost.

The clear winner was a series-parallel hybrid design with fairly
simple hardware of two motors and a planetary gear set… but
highly complicated software.

Despite the complexity and up-front investment in the software, increased
volume would not mean increased cost. This would be the most viable system
with an eye to the future.

During G21 development of a single car... the Prius… it became clear
that the series-parallel technology was adaptable to a broad range of
vehicles.

In fact, there was no reason to think that every one of our passenger cars
could, one day, offer a hybrid powertrain.

Most importantly, it seemed to be a system that held great
potential… for constant improvement, for many years to
come. Uchiyamada-san would be right. If this was a bridge technology it
looked like a very long bridge.

About the time we launched Prius in the U.S., we set in motion just such a
long-range hybrid development plan. Here in the U.S., we began with the
simultaneous development of hybrid versions of the Toyota Highlander…
and Lexus RX. In Japan, we added the Estima and Alphard.

Prius, which means “go before,” would be the first of many
diverse takes on the basic hybrid concept.

Since the launch of Prius in 1997, we now have 23 Lexus and Toyota hybrid
models in various global markets, including Prius Plug-in.

When the next generation Prius arrives, it will begin a new era for a broad
range of Toyota and Lexus vehicles by marking the arrival of a
substantially improved family of hybrid powertrains.

Think of it as, G21… point five.

These new hybrid powertrains will deliver significantly improved
fuel economy in a more compact package
that is lighter in weight and lower in
cost.

The performance of this new generation of powertrains will reflect
significant advances, in battery, electric motor and gas engine
technologies…

And is part of Toyota’s larger portfolio strategy towards the
electrification of the automobile including plug-in hybrid,
battery electric and fuel cell technologies.

Toyota has a deep commitment to vehicle electrification and therefore, to
advancing drive-battery technology. Our next generation of hybrids will
feature improved batteries with higher energy density; that
is… the relationship between the battery’s output and
dimensions.

We have stepped up our research, development and production capacity…
on both nickel-metal hydride and lithium-ion.

And looking to the future, we have ramped up development on new battery
technologies like solid state… and lithium air, as well as devoting
resources to new chemistries beyond lithium, such as magnesium and other
low valence materials.

The next-generation Prius, specifically, will combine our advanced battery
technologies with new electric motors that are smaller in size, and feature
improved power density.

For example, the current Prius motor provides 4 times the power density of
the first. The next Prius power density will be even higher.

Sometimes lost in the discussion of hybrids is the importance of the
gasoline engine and its thermal efficiency. For example, the current
generation Prius gasoline-engine has a thermal efficiency of 38.5
percent.

The new engine in the next Prius will be more than 40 %. A world's
best.

So where do these advancements take us?

The current Prius has been America’s fuel economy king for many
years.

In its three generations, Prius MPG has improved on average… by about
10 percent, each generation. The challenge to continue to improve at this
rate… to beat your own record… becomes very difficult,
but makes it all the more motivating. I can tell you… that we are
very motivated to beat our record.

To complement these substantial gains in powertrain development the next
Prius will ride on a vastly improved chassis.

My background is chassis engineering. In fact, I chose to come work for
Toyota when I was much younger because of the Corolla GT AE86.

The next Prius will feature the Toyota New Global Architecture or TNGA. It
will have a lower center of gravity and increased structural rigidity.
This, along with many other improvements will allow for beneficial gains in
ride-and-handlng… agility and aerodynamics.

Its interior will be roomier with significant refinements in design, layout
and ease of operation. And…it will introduce key
advanced safety technologies.

Developed in parallel with the next Prius will be the next-generation Prius
plug-in.

We have been listening very carefully to Prius PHV owners over the past two
years… and are considering their requests for additional all-electric
range.

We have also heard from these owners, that they would like a more
convenient charging operation. In response, we are developing a new
wireless/inductive charging system that produces resonance between an
on-floor coil and an onboard coil to recharge the battery without the fuss
of a cable.

We will begin verification of the system in Japan, the US and Europe in
2014.

About as long as we have been selling Prius, we have been developing
another form of hybrid technology of critical importance to future
mobility. Delivering zero emissions, along with driving range and
refueling time on par with conventional vehicles, hydrogen will be in our
future for a long time.

Toyota’s first commercially available hydrogen fuel cell vehicle will
go on sale in global markets in 2015.

At the 2011 Tokyo Motor Show, we unveiled the FCVR fuel cell concept. This
year at the Tokyo Motor show, we will get a bit more specific, when we
unveil a well-defined mid-size four-door sedan concept.

That vehicle will make its North American debut at the 2014 Consumer
Electronics Show in Las Vegas in January… where Bob Carter will
discuss the role of our US-based engineering team in its development…
as well as a few of our preliminary plans for introduction into the US
market.

For now, I can tell you that the hydrogen fuel cell stack is currently
developing 3kw per liter of power density.

We believe that’s a “world’s best”… and about
twice that of the fuel stack… we have been using for the Highlander
fuel cell hybrid vehicle that many of you have driven. If you have not,
please take the opportunity during our ride-and-drive segments.

Finally, I would like to address how hybrid technology is influencing
motorsports… and how motorsports will help us develop better hybrid
technologies in the future.

In 2007, with our passenger-car HSD serving as a starting point, we began
work on high performance technologies and components needed to develop a
hybrid drivetrain for elite competition: specifically, the TS-030 World
Endurance Championship Le Mans prototype.

The challenge of the hybrid race car has been the added weight of the
battery and electric motor. The TS-030 uses super capacitors instead of
batteries, which show great promise for their ability to recover, store and
release energy…very quickly.

This potent hybrid powertrain integrates a unique inverter, with a 300-HP
electric motor/generator sandwiched between the 6 speed-transmission and
the 530-HP V8 engine.

The extreme nature of racing, tests the durability and reliability limits
of vehicle components, systems and software helping make TS-030 the
world’s fastest and possibly the most effective rolling hybrid
laboratory program.

Bob Carter mentioned earlier today… that to take full effect, hybrid
technology must be consumed in high volume. Regulatory
push cannot, on its own, induce consumer
pull.

To truly have an effect, our industry must develop a diverse array of
products that consumers are willing to buy.

Where the cost premium is low convenience is high… and the benefits
to the environment… and the pocketbook… are clear. Which is
precisely where we believed hybrids would be, 15
years ago.

Today, patience and a long vision are still the cost of admission. Because
consumer adoption of less convenient and higher cost technologies have been
slow… and will continue so.

But fifteen years from now, I believe that plug-in hybrids, battery
electrics, and especially hydrogen fuel cells could be as
common as hybrids are today.

Perhaps members on my staff, working on fuel cells will be able to say they
were in-on-it from the beginning the way I have been with hybrids.

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